Category: Economy

If you aren’t paying attention to U.S. treasury bonds, you are ignoring a subtle, yet vital, component of how the U.S. economy works. Bond rates are a key component of how the U.S. government monitors and cares for its own health, and by watching what treasuries are doing, you can get an idea of what to expect from other segments of the economy. This is not exactly a precise science, but it is a good litmus test of what you should be expecting from your particular area of focus.

Bonds are an integral part of how the government functions. There’s always a lot of concern about the national deficit, but as long as treasury bonds are managed correctly, there’s very little threat of a default by the U.S. government.

For those of us that have followed the major indices over the last several years, we know that the Dow Jones Industrial Average has been climbing steadily. Over the last five years, its price has climbed by 60 percent. This certainly beats the market average that has been established since the end of the Depression of 3 percent per year, per annum.
The more observant traders realize that this absurd rate of growth is slowing, though. In the last 12 months, in fact, the Dow is up only 6 points total, less than 0.1 percent. In other words, growth in this index has been practically nonexistent. The chart over the last 12 months has been all over the place, but in the end, the actual amount of change is tiny. For an index that ranges up near 18,000 points, 6 is a tiny number, almost meaningless.

When something like the recent Paris attacks happens, there’s no way that global markets will not be impacted. The negative impact that markets experience, though, should not be a major ordeal. The past has shown us that these types of dips in the market do not last forever. In fact, they don’t last long at all. You can expect many markets to drop in price, but then over the next week, rise back to where they would have been pre-terrorist attack. Unfortunately, this is not the first act of terrorism that’s occurred, and time after time, the drop occurs followed by normal activities.

As a trader, it might seem wrong to try and take advantage of something like this, but it does create opportunity. And, by putting money into a market after prices have declined, you are actually doing a good thing by helping French businesses resume their normal activity. For example, as investors panic because of the attack and withdraw their money from stocks, you can be one of the smarter traders and buy when markets start to go down. That money will help companies to begin the process of restoring their stock prices back to normal. It also helps regulate the economy during this crisis by putting money in even though others are taking their money out. Binary options traders have the same opportunity, although their money does not go directly into the market and it doesn’t impact prices. And because binaries do not have an influence on stock (or any other asset) prices, you can use them guilt free to profit off of any declining prices, too.

Paris has announced that the French stock exchanges will be open as usual Monday morning. Although many businesses were shut down over the weekend, those that were not immediately impacted in the violence should be back to normal Monday morning as well. Still, it does need to be acknowledged that these attacks will have a psychological effect. Having explosions rock a city is a scary thing, and it’s quite normal to see money leave the marketplace as a result. An analyst from IG France has commented that the stocks most likely to be impacted are those that cater to consumer trades and tourism, especially those that focus on the luxury side of things. Even these should see business bounce back up once the damage is repaired.

There’s no easy way to tell how long the residual negative effects will last, but it shouldn’t be more than a couple weeks. With the Christmas boom about to occur, it’s not likely that the French economy will see much long standing ill done to it. It’s certainly a scary event, but the good news is that France will have the economic ability to move forward and beyond this. If the terrorists were hoping for a different result than this, then they will be sorely disappointed. Even though France does see a lot of international tourism—it accounts for more than 7 percent of the country’s gross domestic product—there are plenty of opportunities for the economy to make up this money in other places, especially if consumer goods are able to bounce back faster than expected thanks to the holidays. Plus, France does have the biggest tourist economy in the world, and that means that there’s a smaller chance that the economy will be impacted as heavily as a country that doesn’t see a huge number of tourists come in every day. It’s a big chunk of their economy, but because of the demand that Paris, the “City of Love” has, France will overcome this catastrophe economically speaking.

Sometimes, different events will play off of each other and give each other fuel for momentum. These can be positive events, or they can be negative. On Friday, November 13th, the market responded to two different events in a negative fashion. These were oil’s drop in price and the S&P 500 reaching an important milestone when it comes to technical analysis. Let’s take a look at these two events and see how you should approach them with your binary options trading.

The first major event was the fact that crude oil futures fell by over 2.4 percent, over a dollar in price.

One of the news stories that has recently flown under the radar is the fact that President Obama shot down the Keystone XL pipeline. This was designed to move crude oil quickly and safely through wilderness areas, but the pipeline was rejected because of environmental concerns. This is a noble concern, but it does bring up a vital concern: will the oil that was meant to be transported still be able to be moved quickly and cheaply?

First, take a look at the logistics. The pipeline, which was proposed in 2008, before Obama even was sworn into office, was projected to carry 800,000 barrels of crude a day. It was supposed to move oil from Canada and North Dakota to Nebraska, where it could then be moved effectively to refineries on the Gulf Coast.

On Friday, the British pound took off against the U.S. dollar, sending it toward the top of where it had been over the course of the previous trading week. It ended Friday’s U.S. session at 1.5458, up 0.21 percent for the day, and at the highest closing point of the week. The pair is still down a shade from its two week high, but the closing momentum has set the stage for a busy Monday. The European trading session begins very early Monday morning, before most traders are even awake, but by jumping on this momentum early, you can create a ton of profit before you would normally even start your day.

Of course, trading the European session is only one way to create profits off of the Forex market. Another popular method today involves binary options trading. These allow you to profit off of the price movement without having to worry about things like leverage or staying in a position for too long. If you are still not out of a position at 5 PM Eastern, most Forex brokers will charge you an interest fee. But by taking out a week long binary option, you will not have this fee. How you handle these types of trades should be determined on a case by case basis, but most people prefer not to have to pay extra fees.

One of the hottest topics in the financial news sections today is the Federal Reserve. Will they raise rates? Will they hold off? What will this do to the economy? These are important questions to ask, and successful traders should be looking to outside events like this to see how they might influence their assets and the trades that they have set forth for them.

It is important to look past the short term, too. When it comes to the Fed’s actions, history has shown us that it has not had a lasting impact upon the overall trend of the marketplace. Over the short term, various assets, and particularly stocks, can be impacted, but these are very short lasting effects. Because we are now so close to the end of 2015, a Fed move in November or December could influence prices for year’s end, but if the move happens later, taking out a put binary option on an asset for this reason alone would be foolish.

If You Need to Know

Know the Risks

A lot of people come into the markets thinking they will make some fast money. You better get a full understanding of what can happen when things don't go your way. Getting the risk level under control will make a huge difference.